Government entities in Michigan face numerous compliance requirements. Does your government ever have trouble keeping up with the filing requirements? Below we will highlight the commonly missed requirements to improve state compliance and are often are identified during the annual audit, or some your government should consider for future implementation. This list is not all-inclusive but is intended to be a refresher on several typical compliance requirements.
Tax Increment Financing Annual Reporting
Public Act 57 of 2018 set forth new reporting requirements for tax increment financing plans. Not only were new annual reports required by this act, but it also presented specific requirements about what must be available on the government’s website. The website must include items such as meeting minutes, annual budgets and audits, the tax increment financing plan and development plan and other information. Many other items must be made publicly available as well.
Although a website posting is encouraged, your government may forgo that option and make physical copies of the required documents available in a public area at your office. The tax increment financing annual financial report form is due 180 days after your fiscal year-end.
To learn more about the Tax Increment Financing Act and other applicable items, we encourage you to visit the following websites:
Michigan Department of Treasury – Tax Increment Financing Act
Michigan Legislature – Tax Increment Financing Act
Tax Collections for Other Taxing Units
If your government collects taxes for other taxing units, you must remit those taxes on time. The standard deadline is within 10 business days after the first and the fifteenth day of each month. Therefore, all collections on hand as of the first and fifteenth must be disbursed within 10 business days. If your government finds this to be a challenge or currently has a different schedule, hope is not lost! The State can make an exception if there is a payment arrangement agreement with the taxing authority. For example, imagine your government collects taxes on behalf of a school district, and you remit those taxes monthly. That is allowable, so long as there is an agreement. We suggest these agreements be written and signed by the individuals with the appropriate authority.
Further information is available on the Michigan Legislature website:
Michigan Legislature – General Property Tax Act
Electronic Transactions of Public Funds
Most governments today utilize some form of electronic fund transfers (EFTs) to make payments to their vendors. EFTs can be an excellent way to create efficiencies in the payables department; however, certain compliance requirements and controls must be in place before a government begins to make such disbursements. Public Act 738 of 2002 requires that the governing body adopt, by resolution, the authority of an individual to use electronic transactions. Also, this individual must present to the governing body an Automated Clearing House (ACH) policy that outlines the following:
- Who is responsible for ACH agreements.
- Who is responsible for disbursing the funds.
- How will that information be made available to the local unit.
- What internal controls will be used to monitor ACH payments.
Further information is available on the Michigan Legislature website:
Michigan Legislature – Electronic Transactions of Public Funds
Credit Card Compliance
For many governments, the use of credit cards is a controversial issue. Concerns often arise over what internal controls are necessary to ensure that use is appropriate for public funds. Public Act 266 of 1995 recognized the need for policies related to this specific issue and outlines what a Michigan government must do to use credit cards for purchases. The act outlines that the governing body must adopt a written policy by board resolution that describes what the responsibilities and internal controls shall be. If your government currently uses credit cards for purchases, be sure to have a written policy adopted by board resolution.
Detailed information about the requirements of this policy are available at the following link:
Michigan Legislature – Credit Card Transactions
In addition to purchases with credit cards, your government may accept credit cards as a method of payment for taxes, assessments or other fees. The State of Michigan, under Public Act 280 of 1995, also requires a formal resolution by the governing body to accept such payments.
Detailed information about the requirements of this policy are available at the following link:
Michigan Legislature – Financial Transaction Device Payments
The items above are a short list of some of the compliance requirements that governments commonly miss. If you believe your government has failed to file any of the annual reports or does not have resolutions as required by the State of Michigan – or if you believe your policies and procedures could use a tune-up – we encourage you to reach out to your Yeo & Yeo CPA for assistance.